Notification Raising IBC Threshold For CIRP Prospective In Nature : NCLT
Case Name: M/s Arrowline Organic Products Pvt. Ltd vs. M/s Rockwell Industries Limited
Quorum: R. Varadharajan , Member (Judicial)
On March 24, 2020 the Centre issued a Notification under Section 4 of the Insolvency & Bankruptcy Code 2016 (IB Code), through which the minimum threshold for a petition to be maintainable before NCLT was increased from Rs. 1 lakh to Rs. 1 crore.
In a plea filed by Rockwell Industries Ltd., the Operational Creditor, to initiate Corporate Insolvency Resolution (CIR) Process against the Corporate Debtor, Arrowline Organic Products, NCLT passed an Order of Admission on May 5. In light of the March 24 Notification, however, the Corporate Debtor applied for a recall of this admission order and further sought for the petition seeking initiation of insolvency proceedings to be dismissed.
After hearing both the sides, the single Bench comprising of Member (Judicial), R. Varadharajan held that NCLT did not have the power to recall or review its order. In absence of power to recall or review under Section 420 of the Companies Act, 2013 or Rule 11 of the NCLT Rules, the appropriate remedy for the applicant lay in an appeal before NCLAT.
In conclusion, the appeal was dismissed, and it was laid down that the March 24 Notification was prospective in nature.
By Priyanka of SPPU